Money Matters: Don’t avoid estate planning

Some
people think of estate planning as simply drawing up a will or perhaps
creating a trust, but there's much more to it than that. An estate plan
shouldn't be limited to simply providing for the disposition of your
property after your death. The term "estate planning" itself can be
intimidating, particularly for those who are not wealthy. Somehow the
word "estate" implies that such planning is only for people who have
vast sums of money. Everyone needs an estate plan, but it doesn't have
to be complicated.

Over the years I've
learned that many people avoid estate planning because they don't want
to think about such unpleasant occurrences as premature death or
serious disability. They don't think they are being selfish, but they
usually don't realize that the absence of proper planning might create
unnecessary burdens on their families. Others prepare the requisite
documents, but fail to keep them current. Just this week I was reminded
of the importance of regular reviews.

Early
Monday morning a man called me about his wife, who is not expected to
live more than another few weeks. Her cancer treatments have been
unsuccessful, and her health is declining at a rapidly accelerating
pace.

In the process of reviewing their
information, I uncovered a partially completed estate plan. The wife
has a proper will, but no power of attorney or health care directive.
Her attorney recalls drafting those documents, but she never signed
them and the attorney never followed up with her. She owns an annuity
with a beneficiary designation that hasn't been updated since before
her marriage. The people she listed on the original form were friends
she hasn't been in contact with for several years.

Fortunately,
it's not too late to fix the broken plan, but it's going to require
quick action, and the realization that these oversights might have gone
unnoticed has added more stress to an already tragic situation. I don't
look forward to taking documents to the dying woman for her signature.

A
common estate planning misconception is that you don't need a will if
you're married and your home and financial accounts are owned jointly.
Many people also don't realize that beneficiary designations override
instructions in a will or trust document. For example, your will can
say that everything you own should be left to your spouse, but if you
have an old life insurance policy that names your brother as your
beneficiary, your brother will inherit the policy proceeds.

It's
easy to be confused about estate planning, and errors can be
devastating. For these reasons you should consult with an attorney who
specializes in estate planning. If you need assistance locating a
competent attorney in your area, two valuable resources to check are
the National Academy of Elder Law Attorneys (www.naela.org) or the
National Association of Estate Planners and Councils www.naepc.org.

Whether
you already have an estate plan or if you're planning to work on the
project soon, don't assume you're finished after you've signed your
documents. If assets need to be re-titled, be sure to do so. Review
your documents and the beneficiary designations on your insurance
policies, annuities and retirement accounts regularly, to be sure they
continue to reflect your current circumstances and wishes. Start to
think about estate planning as an ongoing process that optimizes the
management of your assets during your lifetime, provides for the
administration of your affairs if you are unable to do so for yourself,
maximizes opportunities to save taxes, and leaves instructions for
when, how and to whom to leave your assets after your death.

Elaine
Morgillo is a Certified Financial Planner and president of Morgillo
Financial Management Inc. She has offices in Portsmouth and North
Andover, Mass., and can be reached at emorgillo@morgillofinancial.com.